06.15.05
ISSN:1528-3836
© 2005 Jonathan Bernstein
Circulation: 4,000+
Estimated Readership: 14,000+
JUST A THOUGHT
It is easier to figure out what to do and say in response to a massive physical disaster than it is in response to a strictly reputational threat, yet many organizations prepare for the former and few for the latter.
Jonathan Bernstein
CRISIS MANAGER UNIVERSITY
Where Wendy's Went Wrong:
Critical Lessons In Crisis Management
By Steven Fink
Editor's Note: My recent Arthur Andersen Supreme Court decision press release attracted the attention of Steven Fink, with whom I've had little past contact but who is amongst a relatively small group of us whose full-time business is crisis management. After exchanging professional pleasantries, Steven accepted my invitation to submit an article for publication here, and I hope it will be merely the first of many such contributions.
When it was first reported in the media that someone claimed to have found part of a finger in a cup of chili served at a Wendy's restaurant, it seemed the fast food chain was off to a flying start in its initial handling of the crisis. Within only a day or two, the local franchise operator in California handed off the event to the corporate office in Ohio, and the parent company was able to swiftly announce with assurance that wherever the finger came from, it did not come from any Wendy's employees or food suppliers - the obvious places to look.
As someone who has managed crises for clients in all fields - including fast food restaurant and other food industry clients - for more than two decades, I observed Wendy's crisis management efforts with professional interest. After Wendy's skillfully navigated the first, usually treacherous 24 or so hours, I was prepared to see the company skillfully and successfully manage the crisis.
But then the company suffered a brain cramp, and it was all downhill from there. Wendy's seemed to have run out of ideas of what to do next, which is astonishing when you consider how many other successfully handled crises there are to learn from - including some well-known hoax crises - in the food industry. Crisis Management by now is a well-documented road map, but Wendy's executives never opened the map.
Worse, they completely lost sight of the actual crisis.
This is a common mistake for companies inexperienced in crisis management. The finger in the chili was not the keystone crisis: it was an event that caused a massive crisis of confidence in the public's mind having to do with the safety and cleanliness and quality of Wendy's food. In short: A crisis of perception. That is why sales plummeted by a reported 50 percent. At no time did the company take any proactive steps to assure customers that it was safe to eat at Wendy's, nor did it offer up any outside food or health experts to speak to the news media on its behalf.
When Pepsi was the target of a widely-publicized hoax claiming hypodermic syringes were found in cans of its soda, no less a personage than then-FDA Commissioner David Kessler appeared on all the morning talk shows and even "Nightline" to attest to the company's long record of food safety and the fact that the syringe story was an obvious hoax. No one went to bat for Wendy's.
In a crisis, perception always trumps reality. Wendy's should have removed chili from its menu just to send an unmistakable message that it was taking all possible steps to assure customer safety. Chili isn't even its core product - it's hamburgers - so removing chili would not have crippled the company financially. Even if Wendy's knew the claim to have been a hoax (see below), removing a "questionable" product is an important message to consumers and would have helped stem the exodus of customers. One message the company could have adopted would have been to tell the public that it firmly believes its chili is safe, etc., but until it can get to the bottom of the matter, chili will be off the menu.
When Chicago's Jewell Food chain suffered the nation's worst outbreak of salmonella poisoning from milk the company produced in its own dairy, the local health department eventually said it was OK to resume milk production and sales, even though the source of the outbreak hadn't been located. The company announced it would not re-open the dairy until the source of the original outbreak was found and completely eradicated. The source was never located and the company kept the dairy shuttered. Wendy's took no bold actions to let customers know it would do whatever was necessary to protect their safety.
Wendy's relinquished control of the crisis to law enforcement. This was a big mistake because the cops were focused exclusively on the "crime" (i.e., where did the finger come from?) which, as previously noted, was not the keystone crisis. Cops are only interested in catching bad guys; it's not their job to manage a business crisis. Catching the culprit is unquestionably important, but Wendy's acted as though this was the single most important thing to do and nothing else could be done until this law enforcement mission was completed. While Wendy's kept upping the reward for information about the finger, no one was addressing the real crisis: the perceived lack of consumer safety causing the real lack of customers.
When the FBI scoured the country looking for the terrorist who laced Tylenol capsules with cyanide, killing seven, Johnson & Johnson let the cops do their job while the company worked on a strategic plan to bring the product back in a new and more secure triple-seal safety package. Wendy's should have let the cops do their investigative work and the company should have begun actively working to restore faith in their restaurants.
Just a few days after the finger incident came to light, I told an NPR radio interviewer that the Wendy's event had all the earmarks of an obvious hoax, and I couldn't understand why the company wasn't more outspoken on this point. Consider: If Wendy's was certain that all employees and suppliers were in possession of their proper digits, and the finger was not "cooked," then the finger had to be placed in the chili after it was served, or after it left Wendy's control. Who placed it in the chili is important, but it is not essential to managing the crisis.
So why didn't Wendy's cry "hoax"? The public would have been receptive to that message and it would have helped defuse the issue. It is possible that the company cowered in the face of an aggressive plaintiff's attorney. This is unfortunate, and may have been caused by Wendy's own attorneys advising them not to say anything publicly due to pending litigation. But since Wendy's did not have an independent third party (such as an FDA Commissioner) rallying to their defense and speaking to the safety of the food and integrity of the restaurants, who else was going to speak for them? If Wendy's doesn't defend itself, why should leery customers trust them and frequent the restaurant?
Wendy's had no plan to entice customers back into its restaurants, even after a month had gone by. Offering a free milkshake and a cents-off coupon won't do it.
When the popular Pat & Oscars restaurant chain in Southern California suffered an E. coli outbreak due to contaminated lettuce from an outside supplier, business dropped by a staggering 70 percent, and did not bounce back even after it was widely reported that the restaurant chain was blameless and the outside supplier had been promptly fired and replaced. It was essential for customers to actually see that it was safe to return there, so Pat & Oscar's threw open its doors and gave free meals to customers over a widely-publicized three-day period. People waited in long lines out the doors for more than two hours. The news media covered the event for 48 hours, doing live remote feeds from the various restaurant locations throughout the day and night broadcasts, always showing the restaurants jammed pack with smiling, contented customers enjoying their food, and a long line of diners waiting to get in. The company successfully recovered its lost sales, and acquired many more new customers.
In the face of dwindling sales, Wendy's announced it was laying off some workers and cutting back the hours of others. Think of the negative message this sends to all of the other thousands of workers in the Wendy's family. Those affected workers should be kept on the job at full salary and benefits, and Wendy's corporate office should have seen to it and picked up the costs, if necessary. (Insurance will probably reimburse the company for such losses anyway). Idle workers should have been given "busy work" to do, such as making and delivering free meals to homeless shelters. Keeping workers on the job sends a strong, positive message to other Wendy's family employees that the company will stand behind them in tough times, and that the company is positive about being about to bounce back. Think how good that would have been for company morale!
When Tylenol was off the shelves for six weeks, McNeil Labs (with parent company J&J's backing) kept everyone working - "busy work" if necessary - but no one was laid off. The company told the workers, "We're coming back!" They even had buttons made proclaiming it. It not only bolstered the morale of McNeil workers, but the morale of every worker in the worldwide J&J family.
One of the biggest mistakes Wendy's seemingly made was that there was no one running the crisis who had any real world crisis management experience. They also apparently had no crisis management plan in place in advance. This also is a common error, often made by executives who either think they can handle anything that comes along on their own, or find themselves in deep denial until it is too late. A crisis is a dynamic, fluid, turbulent and fast-paced state of affairs that requires someone at the helm who has successfully sailed treacherous waters before. Wendy's ignored this lesson and paid the price for going it alone.
Finally, can Wendy's recover? Yes, it can if the company wises up and starts to focus on the issues that really matter. When Jack in the Box suffered an E. coli outbreak and four youngsters died, people were writing the company's epitaph. But by adopting certain crisis management practices and strategic initiatives the company today is one of the strongest fast food chains in the industry.
Wendy's did plenty wrong, but it is still not to late to get it right and recover.
Steven Fink is President of Lexicon Communications
www.CrisisManagement.com, the nation's oldest crisis management firm. Some of his food industry and franchise clients include Jack in the Box, Pat & Oscar's, 7-ELEVEN and the Carl's Jr. Trust. He is also the author of "Crisis Management: Planning for the Inevitable." The above article first ran, very recently, in "Franchise Times."
Editor's Note: Prolific and insightful crisis pro Rick Amme returns to the pages of "Crisis Manager" with admirable advice on the subject of "walking your talk."
Spin Control Is Not Damage Control. Do The Right Thing.
By Rick Amme
So far at least, the people of Aruba are doing a fine job of dealing with a likely crime that could hurt tourism: the disappearance of touring teenager Natalee Holloway. In addition to the usual authorities being involved, the government cut loose more than 4000 civil servants from their jobs to help search for the 18 year old Alabama girl. Even vacationers joined in the hunt. Aruba is DOING things to try to help with the case, and not just talking about it. In spite of this sad situation, I find the Island's actions reassuring and caring. This is action, not spin control. I would bet this response will soften the impact on the Caribbean island. Which leads me to the following:
Talk is cheap. Don't rely upon it alone in a crisis.
A client once asked me to "spin" some public comments to deal with a challenge. I laughed and said, "I do not believe in spin." He responded, "Well, we certainly need to spin this situation." I didn't begrudge his looking for an easier out. He faced a dilemma. However, spin control implies that no matter what you do, you can talk your way out of it if you just use the right words. I have found that spinning rarely works and, if it does, not for long. An example:
US Airways once announced an aggressive 12-point plan to reduce consumer complaints. It followed the US Department of Transportation citing the airline for being among the worst for flight delays, lost baggage, and customer complaints. US Airways promised corrective measures that included working with outside groups who would ensure that promises are kept. The airline suggested it would do just about anything to fix itself. Did anybody buy it? One business journal editorialist in Charlotte, for one, did not. He wrote, "...these [US Airways] steps should be part of any airline's basic operating procedure from day one, not part of a new initiative. We'd like to think it's not a ploy to reassure passengers during a period of unrest among the airline's unionized employees."
Why the cynicism? I believe the airline may have angered enough people with previous poor performance that words themselves are not sufficient. The proof will always be in the doing.
Another example of words falling short:
A client of mine took bold corrective steps to end a crisis. Actions! We drafted powerful statements to announce them, much like US Airways did. What kind of reaction did we get from reporters? Much the same as the airline. Several journalists didn't believe us and were reluctant to simply parrot our problem-solving comments. Their stories focused instead on previous errors rather than planned repairs.
As much as I hate to admit it, the doubt expressed toward my client, as with US Airways, was probably reasonable. How can anyone discern whether we are actually correcting problems or just saying we're fixing them? Why should they trust us? After all, we would not be in trouble if it weren't for our mistakes.
That is why, when you are in difficulty, you should focus on what you are doing more than what you are saying. If you are in a big enough jam in the public eye, and especially if the public has no pre-existing awareness of your values, most people may not believe what you say.
Studies show that, during a controversy, most neutral observers will suspend initial judgment about you until they have enough information to make up their minds. Therefore, while they may give you the benefit of the doubt at first, they will ultimately judge you on your actions. That being the case, you might as well concentrate on what you are going to do first along with what you will say.
Another thing to think about. Even if you did a nice job of "spinning" your message during a tough predicament, imagine how little credibility you would have if, in the end, you made promises you did not keep? So what you in fact do means everything.
Furthermore, planning corrective actions gives you something to talk about in your statements.
Consider the following example from my media-training manual. Please note that all of the statements include some sort of action.
Scenario: An intoxicated employee from your company driving a carload of equally woozy fellow employees home from a company-sponsored weekend ball game strikes and badly injures a 12-year old child. Witnesses tell police the driver was speeding recklessly through a neighborhood. A reporter has just learned details from an officer, will go on the air in minutes, and calls you for comment.
Key message #1
We regret that a child has been seriously injured in an accident involving one of our vehicles. While we don't yet know where the fault lies, we are getting the best possible care for the boy.
Key message #2
We will monitor the child's care to make sure he gets the treatment he needs to recover from this tragic accident.
Key message #3
Our employees are wonderful, responsible people, but we have launched an investigation to learn what happened.
Key message #4
If our investigation discovers there is a problem, we will fix it, because we never want this kind of accident to happen again.
Again, action, not spin.
Since 1994, Rick Amme has been president of Amme & Associates www.amme.com, a crisis consulting firm. He was a journalist for more than 20 years.
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CD-ROM: Crisis Management & The Law
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Featuring Jonathan Bernstein, Richard Levick and Ed Novak
On February 23, 2005, Jonathan Bernstein played talk show host and expert commentator in a one-hour teleseminar featuring internationally renowned litigation PR expert Richard Levick and one of the country's top white collar crime attorneys, Ed Novak. This CD-ROM is a "must have" to play for the executive staff of any organization, for practice group meetings at law firms, or for the entire staff of any PR agency.
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ABOUT THE EDITOR & PUBLISHER
Jonathan Bernstein is president of Bernstein Crisis Management, Inc., www.bernsteincrisismanagement.com, a national crisis management public relations agency providing 24/7 access to crisis response professionals. The agency engages in the full spectrum of crisis management services: crisis prevention, response, planning & training. He has been in the public relations field since 1982, following five-year stints in both military intelligence and investigative reporting. Write to jonathan@bernsteincrisismanagement.com.
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